ConocoPhillips, Tyson Foods to make renewable diesel

ConocoPhillips has teamed with meat producer Tyson Foods Inc. to produce diesel from animal fat and will spend $100 million over the next few years to upgrade several US refineries to enable production of the new diesel.

Angel White
Associate Editor

HOUSTON, Apr. 18 -- ConocoPhillips has teamed with meat producer Tyson Foods Inc. to produce diesel from animal fat and will spend $100 million over the next few years to upgrade several US refineries to enable production of the new diesel.

The announcement was made by ConocoPhillips Chairman and Chief Executive James Mulva at a joint press conference Apr. 16 at the company's headquarters in Houston.

The renewable fuel will be introduced at retail outlets in the US Midwest in the fourth quarter of this year, Mulva said.

Production will ramp up through spring 2009 to as much as 175 million gal/year. This represents 3% of ConocoPhillips' diesel production in the US, Mulva said.

Tyson will begin preprocessing animal fat from some of its North American rendering facilities for processing at ConocoPhillips' refineries later in the year.

ConocoPhillips' 146,000 b/cd refinery in Borger, Tex., is expected to be the initial US location where the new fuel would be produced. The fuel will be chemically equivalent to diesel produced from hydrocarbon feedstocks and can be transported directly through existing infrastructure, the companies said in a joint statement. It will have a higher cetane value than conventional diesel.

The fuel was successfully tested at ConocoPhillips' 71,000 b/cd Whitegate refinery in Cork, Ireland. This refinery began commercial production of renewable diesel using soybeans late last year. The facility currently produces about 1,000 b/d of biofuel, ConocoPhillips said.

Tax credit necessary
Responding to questions, Mulva said the project would be unprofitable without the current income tax credit of $1/gal for agricultural biodiesel, a category that includes animal fats.

The federal tax credit for production of biodiesel fuel and biodiesel fuel mixtures produced after Dec. 31, 2004, was established by the American Jobs Creation Act signed by President George W. Bush in 2004. According to the Internal Revenue Code, producers of biodiesel mixtures are able to receive a payment from the US Treasury for any biodiesel credits earned that exceed the excise tax attributable to the biodiesel mixture set forth on a quarterly return (OGJ, Feb. 19, 2007, p. 45).

The tax credit, which is due to expire next year, should be extended beyond 2008, Mulva said.

Contact Angel White at angelw@ogjonline.com.

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